Social Networks and Restaurant Ratings

When choosing among restaurants, consumers either look to their peers or to anonymous reviews on the Internet. In this study, we examine the impact of peer versus anonymous social networks on restaurant ratings and revisitation intent. We find that peer networks are substantially more effective in driving consumers' preferences for restaurants, even after controlling for the endogeneity of peer ratings, and that negative reviews have a greater impact on preferences than do positive reviews. Our results suggest a more general finding, namely, that peer networks may be more effective than anonymous networks for many important, complex choices. [EconLit citations: D12, L11, M31, Q13].